Monday, March 30, 2015

Soros: Ukraine is Collapsing

The deterioration of Ukraine’s situation is accelerating. The financial collapse of which I had been warning for months occurred in February, when the hryvnia’s value plummeted 50% in a few days, and the National Bank of Ukraine had to inject large amounts of money to rescue the banking system. The climax was reached on February 25, when the central bank introduced import controls and raised interest rates to 30%.

Since then, President Petro Poroshenko’s jawboning has brought the exchange rate back close to the level on which Ukraine’s 2015 budget was based. But the improvement is extremely precarious.

This temporary collapse has shaken public confidence and endangered the balance sheets of Ukrainian banks and companies that have hard-currency debts. It has also undermined the calculations on which Ukraine’s programs with the International Monetary Fund are based. The IMF’s Extended Fund Facility became insufficient even before it was approved.

But EU member states, facing their own fiscal constraints, have shown no willingness to consider additional bilateral aid. So Ukraine continues to teeter on the edge of the abyss

This is all, of course, because of U.S. meddling in the country, especially the U.S. instigated overthrow of the democratically elected government of Ukraine. Soros ignores this and absurdly blames Russia, but he is correct about the likely developments from here:

A more likely scenario is that Europe muddles through by drip-feeding Ukraine. Ukraine does not collapse, but the oligarchs reassert themselves and the new Ukraine begins to resemble the old Ukraine.